Form 1099-INT (Rev. January 2024) – 2024 Tax Year Checklist
Purpose
Form 1099-INT reports interest income paid during the 2024 calendar year. The January 2024 revision clarifies the covered security premium amortization under Section 171 and the constant yield market discount calculation rules, effective for securities acquired on or after January 1, 2015, which are now fully implemented across all reporting institutions.
Filing Requirements and Step-by-Step Checklist
Step 1: Verify Payer and Recipient TIN Accuracy
Ensure both the payer’s and recipient’s taxpayer identification numbers are complete and accurate. Copy A filed with the IRS must contain full, unmasked TINs for both payer and recipient. For Copy B furnished to the recipient, you may truncate the recipient’s TIN to show only the last four digits for privacy protection pursuant to Regulations section 301.6109-4.
The payer’s TIN must never be truncated on any copy. Confirm all TINs match Social Security Administration or IRS EIN database records for the 2024 tax year reporting to avoid backup withholding requirements and penalty assessments.
Step 2: Report Taxable Interest in Box 1 Net of Covered Security Premium Amortization
Report taxable interest of $10 or more, or $600 or more if paid in the course of trade or business. For covered securities acquired at a premium, you must report the amount of bond premium amortization for the tax year unless the recipient provided written notification that they elected not to amortize bond premium under Section 171.
You may report either a net amount of interest that reflects the offset of the interest payment by the premium amortization amount, or report gross interest in Box 1 with the gross amortization amount separately in Box 11. Never use selective offsets or partial reporting for 2024 holdings.
Step 3: Allocate U.S. Savings Bond and Treasury Interest to Box 3
Report interest on U.S. Savings Bonds, Treasury bills, Treasury notes, and Treasury bonds in Box 3. These amounts are exempt from state and local income taxes and must not be duplicated in Box 1. Verify that all Treasury obligations are properly isolated in Box 3, regardless of the premium amortization treatment. For Treasury obligations that are covered securities acquired at a premium, report any bond premium amortization in Box 12 unless the recipient waived amortization in writing.
Step 4: Calculate Market Discount Using Constant Yield Method
For taxable or tax-exempt covered securities held during 2024, report accrued market discount in Box 10 if the recipient made a Section 1278(b) election and notified you in writing. Use the constant yield method described in Section 1276(b)(2) to determine accruals of market discount unless the recipient provided written notice electing the non-constant yield method under Regulations section 1.6045-1(n)(5). For covered securities with original issue discount, report the market discount on Form 1099-OID rather than Form 1099-INT.
Step 5: Report Bond Premium Amortization by Security Type
Report bond premium amortization separately based on security classification. Box 11 applies to taxable covered securities excluding U.S. Treasury obligations. Box 12 applies exclusively to U.S. Treasury obligations that are covered securities. Box 13 applies to tax-exempt covered securities. Do not combine categories across boxes. Each amount reflects the premiums allotted to interest payments made during 2024. Leave the box blank if you have already reported a net amount of interest that includes the premium offset.
Step 6: Mark FATCA Filing Requirement Box When Applicable
Check the FATCA filing requirement checkbox if you are a U.S. payer reporting on Form 1099-INT to satisfy your Chapter 4 account reporting obligation as described in Regulations section 1.1471-4(d)(2)(iii)(A), or if you are a foreign financial institution reporting payments to a U.S. account pursuant to an election under Regulations section 1.1471-4(d)(5)(i)(A).
When this box is checked, you must include an account number on the form and ensure the recipient receives notice that Form 8938 filing requirements may apply based on aggregate foreign account values exceeding statutory thresholds.
Step 7: Include Early Withdrawal Penalties in Box 2
Report any interest or principal forfeited because of early withdrawal of time deposits, such as certificates of deposit or savings accounts, during 2024 in Box 2. Do not reduce the amount reported in Box 1 by the forfeiture amount. The recipient may claim this penalty as an above-the-line deduction on Form 1040 or 1040-SR when computing adjusted gross income. Calculate the deductible forfeiture amount according to Revenue Rulings 75-20 and 75-21.
Step 8: Attach Form 1096 When Filing Copy A
Submit Copy A of Form 1099-INT with Form 1096, Annual Summary and Transmittal of U.S. Information Returns, when filing with the IRS. If you are filing a corrected return to amend a previously filed Form 1099-INT, clearly mark the form as “CORRECTED” and file within the statute of limitations for the original return year. Ensure Form 1096 reflects accurate totals and filer identification information matching your IRS records.
Step 9: Furnish Copy B to the Recipient by January 31, 2025
Provide Copy B to each recipient by January 31, 2025. Recipient copies must include the complete recipient name, address, and account number if you assigned one. Include the warning statement advising that failure to report taxable income may result in negligence penalties. You may truncate the recipient’s TIN on Copy B to show only the last four digits for privacy protection.
Step 10: Report Investment Expenses in Box 5 for Single-Class REMICs Only
Box 5 is used exclusively for reporting the recipient’s proportionate share of investment expenses from a single-class REMIC as defined in Temporary Regulations section 1.67-3T(a)(2)(ii)(B). This amount is included in the interest income reported in Box 1 and is provided for informational purposes only. Recipients cannot deduct this amount. If you are not reporting for a single-class REMIC, leave Box 5 blank.
Step 11: Report State Tax Withholding in Boxes 15 Through 17
Use Boxes 15 through 17 if you participate in the Combined Federal/State Filing Program or if you are required to file paper copies with a state tax department. In Box 15, enter the abbreviated name of the state. In Box 16, enter the payer’s state identification number assigned by that state. In Box 17, enter the exact amount of state income tax withheld from the interest payment and remitted to the state tax authority during 2024.
Reconcile amounts with state deposit records. Note that state income tax withholding reported here is separate from federal backup withholding reported in Box 4.
Step 12: Handle Nominee Situations with Separate Forms
If you received interest as a nominee or middleman for the actual beneficial owner, issue a separate Form 1099-INT for each beneficial owner showing their allocable interest income. List yourself as the payer and the beneficial owner as the recipient. File all nominee Copy A forms with Form 1096 under your identification number as the nominee filer. A spouse is not required to file a nominee return for amounts belonging to the other spouse.
Step 13: Report Federal Backup Withholding in Box 4
Enter any federal income tax withheld under the backup withholding rules in Box 4. Backup withholding applies when the recipient fails to provide a correct TIN or when you receive IRS notification that the recipient has underreported interest income. The backup withholding rate and complete requirements are detailed in the current General Instructions for Certain Information Returns. Backup withholding reported in Box 4 is remitted to the IRS, not to state tax authorities.
Step 14: Complete Foreign Tax Information in Boxes 6 and 7
If you paid foreign tax on behalf of the recipient, report the amount in U.S. dollars in Box 6. In Box 7, enter the name of the foreign country or U.S. territory to which the foreign tax was paid. The recipient may be able to claim this tax as either a deduction or a credit on their federal income tax return, as per the instructions for Form 1040 or Form 1040-SR.
Step 15: Report Tax-Exempt Interest and Private Activity Bonds
Report tax-exempt interest of $10 or more in Box 8 for interest paid on obligations issued by states, the District of Columbia, U.S. territories, Indian tribal governments, or their political subdivisions. For covered securities acquired at a premium, you may report either net interest reflecting the premium offset or gross interest with the amortization amount in Box 13.
If the tax-exempt interest is from specified private activity bonds subject to alternative minimum tax, include that amount in both Box 8 and Box 9. Enter the CUSIP number for single bonds in Box 14, or enter “various” for multiple bonds.
Key 2024 Tax Year Updates
The covered security premium amortization rules under Section 171 and Regulations section 1.6045-1(n)(5) require a written recipient election to waive amortization. The January 2024 revision emphasizes that payers must report either net interest or gross interest plus gross amortization for all 2024 holdings. Selective offsets are prohibited.
The constant yield calculation method for market discount on covered securities acquired on or after January 1, 2015, is now the standard reportable treatment across all institutions. Recipients may elect the non-constant yield method only by providing written notice to the payer per Regulations section 1.6045-1(n)(5).
The FATCA filing requirement checkbox alerts recipients to potential foreign account reporting obligations if the account is held outside the United States. Updated instructions direct recipients to Form 8938 instructions to determine whether their aggregate foreign account values exceed applicable reporting thresholds.
When Section 171 premium amortization exceeds interest paid on a covered security, Regulation section 1.171-2(a)(4) provides that excess amortization creates a nondeductible loss on tax-exempt securities and requires specific adjustment procedures on taxable securities. Cross-reference these regulations when reporting amounts in Boxes 11, 12, and 13.
Backup withholding under Box 4 applies when recipients fail to provide correct TINs. Form W-9 requirements reinforce that payers must obtain valid TIN certification for all 2024 account holders to avoid mandatory withholding obligations. The backup withholding rate and complete procedural requirements are specified in the current General Instructions for Certain Information Returns.
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This checklist is for educational purposes only and does not constitute tax or legal advice. Always review official IRS instructions and consult a qualified professional for guidance.
